A digital future where auto brand doesn’t matter?
As a new study from IBM describes it, you’re heading to work in your new vehicle. The vehicle wishes you a happy birthday and shows social media greetings from family and friends.
The vehicle starts driving you to your destination while also checking your health vitals, checking your house to see if you left any appliances on, and downloading your favorite audio book.
That hypothethical scenario above, from a new study from IBM, might have sounded far-fetched a few years ago, but according to the study titled, Automotive 2030: Racing Toward a Digital Future, dramatic change is on the way. The study covers questions such as what actions the auto industry can take to accommodate the change. The report seeks to answer additional questions, such as: How can an automotive organization evolve to operate and innovate like a high-tech company that centers its business around digital and data?
The study also notes that those changes might bring workforce challenges to the auto industry as it begins to build and inhabit digital ecosystems.
With vehicles delivering personalized digital experiences and AI and autonomy becoming standard features, automakers will need important new skills to “remake their workforce from top to bottom,” according to IBM.
IBM said the industry will have to spend more than $33 billion over the next 10 years to bring a direct workforce of more than 8 million people up to digital speed.
How will the industry achieve that? Executives expect a substantial increase in training and reskilling budgets, according to the study.
Fifty percent of surveyed automotive executives say they need to reinvent their organizations with digital technologies, supported by data, in the next 10 years to succeed or even survive, according to the report. Unless the digital experience earns customer loyalty, even the vehicle brand could lose importance in the mobility-as-a-service world, the study states.
Consumers are placing less emphasis on automotive brands and more on access to vehicles and service when and where they need them most, according to the study.
A vehicle’s ability to learn about its occupants, integrate with their devices and have a natural conversation with them will bring greater brand loyalty, surveyed auto executives say. For automakers, according to the report, that presents an opportunity to redefine their brand differentiators by “embracing open digital platforms, changing the way they work and accelerating reskilling efforts.”
“In the next decade, as cars evolve into networked machines dominated by software, the concept of an auto brand may be facing a digital revolution that will require prioritizing in-vehicle digital experiences over driving features to separate from the pack,” IBM global automotive research lead, Institute for Business Value Ben Stanley said in a news release.
Eighty-three percent of executive respondents to the survey say they understand the strategic value of data in their industry. This data can bring operational efficiencies, new business models, or consumer-facing digital experiences such as integration with other personal devices, personalized services and the ability to connect into other aspects of a person's life, according to the study.
However, only 18% of respondents to the survey say they are operating on a digital data platform today.
“Digital reinvention will power the automotive industry towards autonomous, connected, electrified and shared vehicles built on diverse platform ecosystems,” said IBM general manager, global automotive, aerospace & defense industries Dirk Wollschläger. “These ecosystems will be a mixture of technical, agile, high-performance companies from multiple industries, each bringing their own specialization and value to the mix.”
To determine what external influences are impacting the automotive industry today, and how they will change the auto ecosystem in the next 10 years IBM surveyed 1,500 automotive executives globally. The IBM Institute for Business Value developed the Automotive 2030 study, which also surveyed more than 11,500 consumers to better understand what they expect from mobile digital experiences.